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Top 10: U.S. Cities With The Highest Rents

Published on Tuesday - August 02, 2016

As the U.S. housing market continues to flourish in 2016, one thing has become very apparent for non-homeowners: Rental prices are rising. The surge in rental costs isn’t surprising considering the fact that homeownership has dropped to a staggering 62.9 percent, the lowest rate since 1965.

“With homeownership rates falling, it makes sense for landlords to continue to raise pricing on their rental units, especially in markets with tighter inventory,” said Sam Radbil, spokesman for rental listings firm Abodo.

For many would-be buyers, the problem is home affordability. In June, the median national home price hit $247,700 — the highest recorded since 1968. The last four years have also witnessed the supply of high-priced homes expand while the number of starter homes, which are generally geared towards first-time homebuyers, drop 44 percent. Not only is a shortage in available housing continuing to drive home prices up, but at the same time it’s limiting the amount of affordable homes.

“Consumers are increasingly worried about tight inventory when finding a home, and rightly so,” said Chief Economist at Trulia, Ralph McLaughlin.

Backed by low mortgage rates and less inventory, homebuyers came out of the woodwork this spring selling season, setting its best record in nearly a decade. While mortgage rates remain low, a combination of rising home prices and rents continue to be a catch 22 for potential homebuyers as affordability hinders their chances at purchasing a home.

“Right now affordability is a flashing yellow light on the housing market, and I just hope it doesn’t become a red light that stops the housing recovery,” said Lawrence Yun, chief economist of the National Association of Realtors (NAR).

In a recent report, housing data company RealtyTrac ranked the best markets for buying residential rental properties in 2016. For renters, the finding are unsettling as rental prices for the majority of housing markets continues to skyrocket.

“Rents are rising faster than median home prices in 45 percent of the markets analyzed — indicating continued strong demand for rentals in those markets — while annual wage growth is outpacing rent growth in 43 percent of the markets — indicating room for rising rental returns in those markets,” said Daren Blomquist, senior vice president at RealtyTrac.

Top U.S. Cities With The Highest Rental Prices

Los Angeles real estate

According to ApartmentList.com, the rental price nationwide grew 0.3 percent from June to July with cities such as Colorado Springs, Seattle and Reno experiencing the sharpest increase, while coastal cities such as San Francisco and New York continued to dominate the highest rents in the nation.

Based on the median prices for a 2-bedroom, the following highlights the top U.S. cities with the highest rents:

10. Seattle, WA – $2,300

Although Seattle makes the list at #10, rental prices in the Emerald City are rising faster than any other big city in the country. Rental prices for the Seattle real estate market have experienced an 8.4 percent growth over the past year, while the last four years has seen the monthly cost increase nearly $500 despite job growth and income failing to keep pace.

9. Miami, FL – $2,350

The Magic City continues to be a hotbed for rental properties and its monthly rent cost reflects the demand. The average rental price in Miami is now $2,350; However, in relation to income, only 6.9 percent of rental properties are affordable in the Miami metro area. That said, the Miami real estate market continues to gain steam in 2016.

8. Stamford, CT – $2,640

One of the more expensive cities in the nation, the city of Stamford in Connecticut boasts an average monthly rental price of $2,640.

7. San Jose, CA – $2,650

Nestled by the rolling hills in Silicon Valley, San Jose has become a real estate juggernaut with some of the highest rental prices in the nation, with an average monthly rental price is $2,650.

6. Los Angeles, CA – $2,650

The Los Angeles real estate market is booming and rental prices mirror that upstick, as the average monthly rental price is $2,650. In terms of affordability, the troubling aspect in LA is rental prices are growing much faster for low-end apartments and homes, where annual rent growth has exceeded more than 27 percent in the past year. Without a doubt, it’s very, very expensive to rent in the City of Angels.

5. Washington, DC – $3,140

Nowhere have rental prices risen faster in the past several decades than in the nation’s capital where the average monthly rental price of $3,140. Since 1980, rents in the D.C. area have grown 86 percent while incomes of renters have grown only 33 percent.

4. Boston, MA – $3,190

Another city experiencing major growth in rental prices is Boston. The city has seen significant growth in the past month with rents increasing by 2.9 percent. The average monthly rental price for a 2-bedroom in Boston is $3,190. That said, the Boston real estate market is one of the more expensive in the country.

3. Jersey City, NJ – $3,340

The average monthly rental price in Jersey City is $3,340.

2. San Francisco, CA – $4,730

In a surprising twist, San Francisco has dropped to second most expensive city for renters based on recent decreases in month-to-month rental prices. Although rents fell 0.1 percent from June to July, the average monthly rental price in San Francisco is $4,730.

1. New York, NY – $5,130

As #1 on this list, rental prices don’t get much more expensive than the Big Apple. New York is the epicenter for expensive real estate and renters are feeling it. In just the past month, rents in New York increased 1.6 percent! The New York real estate market remains one of the hottest in the country.

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